Australia could lose $3 trillion and 880,000 over the next 50 years if climate change is not addressed.
Deloitte Access Economics has found the economy could shrink by six per cent by 2070 if global warming goes unchecked.
Deloitte chief economist Chris Richardson said the coronavirus pandemic highlighted the cost of overlooking catastrophic risks.
“So it’s an urgent wake-up call for us to get ahead of that other big risk – climate change,” he said.
If Australia does rise to the challenge, it could create 250,000 jobs and grow the economy by $680 billion.
Mr Richardson said the best and most effective way to tackle climate change was through market mechanisms.
“Australians need policy and regulatory reform that modernises our economy and unleashes business investment,” he said.
“The benefits of acting are huge. But we are fast running out of opportunity.”
The report’s principal author Pradeep Philip said the cost of inaction on climate change rose each year.
“Doing nothing is now a policy choice, and it is costly,” Dr Philip said.
“By 2050 Australia will experience economic losses on par with COVID every single year if we don’t address climate change. That would compromise the economic future of all future generations of Australians.”
He said the government and private sector needed to get cracking to accelerate Australia’s inevitable shift to a low emission future.
This means mining for minerals for new technologies and investment in upgrading and replacing Australia’s energy infrastructure.
“Yes, there’ll be costs. And there’ll be some losers,” Dr Philip said.
“But we’ll all be losers if we fail to act.”
A spokesman for Energy Minister Angus Taylor said the government’s technology investment road map would create jobs, cut costs and reduce emissions.
“The Morrison government will continue to deliver practical measures that guarantee reliable and affordable energy, stimulate jobs and reduce emissions, without imposing new costs on households, businesses or the economy,” he told AAP.
“Getting these technologies right will also substantially reduce emissions and make net zero achievable.”
The federal government is under increasing international pressure to commit to achieving net zero carbon emissions by 2050.